Unidentified Analyst: I want to ask a few questions. First of all, I noticed that the company’s operational costs have been continuously decreasing. What actions did the company take last year in supply chain measurement and warehouse logistics to improve efficiency and reduce costs? And how much potential for improvement remains? And I also want to know, since the company won numerous awards last year, what is the significance of these awards and their value to the company? And also, what is the company’s current cash position and will the company continue to burn cash to grow the business?
Junling Liu: Okay, so I’ll take the first 2 and then Luke will take the last one. Okay, the first question you mentioned is about how we reduce our operational costs. Last year, we focused heavily on reducing costs and enhancing our efficiency. In addition to improving our services, we have made quite some breakthroughs. One is that we continuously optimize our fulfillment costs. You can see quite a remarkable reduction in fulfillment costs. And measures such as improving workforce efficiency, process re-engineering, rent reduction and increasing the proportion of regional fulfillment allow the fulfillment costs to reach 2.74%. And it’s a significant decrease from the 2.94% of the year before. And just this alone reduces cost savings over RMB20 million.
We also improved the service quality of our supply chain upstream. We launched a so-called Golden Partner Service, covering upstream customers comprehensively. We provided intelligent warehouse deployment service, simplifying the entire delivery process, reducing supplier warehousing waiting time by 50% and improving receipt time by 30%. Last year, I mentioned another example on our intelligence supply chain service platform we launched last year. We integrated warehouse-to-warehouse transhipment plus last-mile delivery model, to achieve cost savings of 20% for transhipment. And reduced energy on the road by 50% and increased turnover efficiency by 20%. So through this effort, you can see what we have done to improve our operational efficiency as well as the supply chain cost.
I think the next question is about all the awards we have won last year. Junling mentioned quite a few, including the National E-Commerce Demonstration Enterprise, the Shanghai E-Commerce Demonstration Enterprise, the Shanghai Key Productivity Internet Service Platform, et cetera. All those awards, we feel very proud of earning those. These honors signify that the company has achieved sustainable, robust and rapid development in fields such as diesel technology innovation, intelligence supply chain management and digital operations. It holds an advanced position among domestic peers. And we believe that we are highly recognized from the industry and the regulatory bodies, playing an important role in promoting the diesel transformation and upgrading of the pharmaceutical and the health industry.
May I let Luke answer the next question?
Luke Chen: Sure. Yes, about the cash. And we have just disclosed our cash-to-cash equivalence that restricts cash and shortens investment, amounting to RMB674 million as of December 31, 2023. If you’re looking at our working capital base, our AP date is around 42 to 45 days. Our average rate date is around 25 to 30 days. And our AR date is 7 to 12 days. So basically, we have a positive cash flow on the trading level which means that the cash received for the sales of drugs and the cash paid for the purchase of the drugs. Now, as we discussed, we are very close to profitability. And we believe that with our ability to make profit, we will no longer need to burn cash to grow on this business. Instead, we’re confident that this business will create overall positive cash flow for the company. I hope we answered your questions.
Operator: Your next question comes from Jada Wuh [ph] from Arbor Group Capital.
Unidentified Analyst: This is Jada Wuh [ph] from Arbor Group Capital. Congratulations on your success last year. Here, I’ve got 2 questions. The first one is about JBP business segment. I want to know what are the expected outcomes of the JBP business segment expansion and how will it enhance customer experience and operational efficiency? And the second one is about your OEM product. What are the company’s plans for its OEM products in the future?
Junling Liu: I’ll take your 2 questions. JBP is one of the fastest-growing business segments in 111. In last quarter of Q4, 2023, JBP business has been growing 25% year-over-year and is now close to 60% of our total inventory and also our total sales. And JBP is not only a supply channel. Actually, it is, in fact, far beyond a channel. JBP provides a total solution for our upstream partners like pharmaceutical companies and also commercial companies, including assortment management, price management, inventory management, customer acquisition, digital marketing and also financing services. With the current launch of the third generation of JBP which provides a much more robust solution for those departments. We can anticipate it will soon continue the growth momentum and not only in sales revenue side but also from profit perspective.
As all these value-added services actually will literally help our partners to gain more sales and more profit. And at the same time, will also bring us more profit. Regarding OEM products, there are a couple of — there are some private labels registered in 111. We have Guan Zhao which is for our chain store customers. And [indiscernible], honor is for our individual store customers. And also, [indiscernible] is for battery supplements. By last quarter, we already launched 170 private labels to use. And almost all of these products have been well accepted by our downstream customers. And they are now well sold in more than 20,000 pharmacies across the country, including those very remote areas like XinJiang, Xizang, et cetera. And much more SKUs have been in our pipeline, including OTC, including Rx, including supplements and also medical devices.
